CPO - Be ready to take profit - 19/10/09

This market did not make much headway on the upside but it also did not hit my stop. So my long positions stay as the Stochastic continues to rise and the MACD has also turned positive and rises toward its own zero signal line which would be a more bullish signal. But unfortunately the ADX has now being falling which is confirming a lack of trend in the past week. And also pay attention to the fact that the D- is still above the D+ which is not confirming an overall bullish mode in this market.


The weekly chart has some changes from the previous week's as price has now managed to close above the lower Bollinger Band but the MACD remain negative. The Stochastic has turned around upward but is still negative. The most important of all is the flat ADX which is below the 20 's signal line which mean this market is 'dead'. I have drawn a down sloping trendline marking out its resistance which is quite near the upper Bollinger band. Taking this, only turn bullish if prices manage to close above those levels.

Since the ADX is not too encouraging, place your stop at 2112 or maybe you should take off your long positions when the Stochastic goes into its overbought zone . Take note 2208 is the 38% and 2267 is the 50% retracement levels for this rebound within the bigger bear cycle. You may also use your discretion to take out your longs at those levels.

If the daily ADX is to fall below its 20's signal line , that would make it mirroring that of the weekly chart's which I expect this market to go into one of those long period range bound situation which would be difficult to take up positions trading.